Ever Heard of Eula, Texas? Part 1 of 4: Important considerations when developing an End-User License Agreement

Quick info on Eula, Texas before talking about software EULAs

Before today, none of us here at SoftwareKey had ever heard of Eula, Texas, either. You see, the staff member assigned with the task of composing a blog post regarding EULAs (End-User Licensing Agreements) was looking for inspiration (OK, let’s get real — EULAs are, quite frankly, boring and, at best, a necessary evil in the software publishing world) and decided to Google the term. He was particularly intrigued by the surprise inclusion of Eula, Texas within the first page of displayed search results.

Eula, Texas, it turns out, is situated on the outskirts of Abilene and is but one of hundreds of blink-and-you’ll-miss-it towns (i.e., the population is less than 200 denizens) scattered throughout the vast expanse of the Lone Star State. Not a real big deal, we know.

But here’s a fascinating piece of minutia regarding Eula: It is the birthplace of Jack Favor, a rodeo star of the 1940s who was framed and falsely incarcerated for the murders of a married couple who owned a bait-and-tackle shop in northwestern Louisiana. Favor, who was eventually acquitted and released upon being granted a retrial in 1974, subsequently sued the state of Louisiana for $7 million dollars but, sadly, returned home to Texas with only a comparatively paltry $55,000 in his pockets. Country crooner-turned-actor Clint Black later portrayed Favor in a 1998 made-for-TV movie, Still Holding On: The Legend of Cadillac Jack.

EULAs are not exciting, but a necessary evil

Still finding the topic of EULAs to be about as potentially exciting as sitting outside the Eula General Store on a hot, lazy July afternoon and watching the parked cars rust, our staff member (who has since been re-assigned to sweeping the office floors and taking out the garbage!) convinced us to enlist the aid of a professional with expert-level knowledge of the subject. And that’s exactly what we did.

In the first of a four-part series of related blog posts, Jordan Donaldson, a prominent Orlando, Florida business attorney, explains the overall purpose of the EULA and discusses the four types of intellectual property rights — copyrights, trademarks, patents, and trade secrets — and their immense importance to you as a software publisher.

Welcome to our blog, Mr. Donaldson. The SoftwareKey soapbox is all yours…

Part 1 of 4: Important considerations when developing an End User License Agreement

EULAs, or software license agreements, are documents that are often discussed but rarely entirely understood. Most software companies know they should have them in place, but may not know why or how to properly implement them. Purchasers of software around the world agree to them every day, mostly without reading them or understanding the purpose for which they must click “Accept” – a simple action establishing those purchasers’ limited rights to use the software. In a time of growing legal disputes and patent trolls (those who attempt to enforce patent rights to collect licensing fees, but do not manufacture products or supply services based upon any patent), it is vital to the longevity of software companies to properly understand, implement, and record acceptance of EULAs by end-users. Carl Sagan famously wrote “If you wish to make an apple pie from scratch, you must first invent the universe.” In a similar vein, if one wishes to understand the core purpose of EULAs, one must understand the rights of software companies they intend to protect.

Maybe you have heard the phrase “intellectual property rights” mentioned in conversation about information technology, and may wonder how these rights concern you as a developer. What are they? And how are they applicable to your software?

Software is intellectual property, which is a scope of intangible rights of ownership in a particular asset. Each one of these rights serves as an individual asset–a piece in the overall whole regarding ownership. Intellectual property (“IP”) professors in law schools across the country describe IP rights as “a bundle of sticks.” This comparison is meant to illustrate that these rights may be parceled out in different ways to different parties. IP law defines an array of protection methods based on these rights to ensure the protection of IP owners.

There are four types of intellectual property rights that pertain to software: copyrights, patents, trademarks, and trade secrets. These rights each provide an explicit form of legal protection. Copyrights, patents and trade secrets are used to safeguard the technology itself, whereas trademarks protect names or symbols that identify a product in the marketplace. It’s important to understand the legalities behind intellectual property rights to maximize the economic value of software and protect it from competitors.

Copyright Protection

Copyright protection covers the form in which an idea is disclosed. Where software is concerned, copyright law protects the source and object code, in addition to exclusive elements of the graphical user interface (“GUI.”) The owner of a copyrighted software program is eligible to particular rights, such as the ability to copy the software, develop modified versions of the software, and distribute copies of the software to the public by license. Anyone who implements the above rights without the direct permission of the copyright owner is classified as an infringer and faces liability for damages or statutory fines.

The rights granted under copyright law exist to reward the innovation of creators, and the ability to prohibit duplication of a copyrighted work protects the owner against verbatim replication of code by competitors. The same rights protect against indirect copying such as translating code into a separate programming language. Copyright protection is automatically instated upon creation of an original work and there is no explicit need to apply for a copyright; however, obtaining copyright registration is necessary if an IP owner wishes to sue a competitor to protect its rights, therefore, registration is prudent. The protection lasts for the duration of the creator’s life plus an additional 50 years. The rule differs for software created by an employed individual, with the protection lasting 75 years from its creation. However, mere ideas behind a program are not protected by copyright law and are fair game to competitors.

Software Patents

With patents, there exists a 20-year monopoly on the right to create, use and distribute an invention, and must be described in detail to the Patent Office to be granted protection. An invention must fulfill the requirements of being new, useful and “nonobvious,” meaning that the submission must be more than a blatant step in technological advancement.

Software patents can provide protection that copyright and trade secret laws cannot. Unlike copyright laws, patents can protect the ideas behind a program, as well as systems, algorithms, methods and functions such as editing functions, compiling and operating system techniques, program translation methods, and display presentations. Any individual creating, using, or distributing an invention protected by patent laws without permission of the creator is guilty of infringement and faces heavy penalties.

Trade Secrets

A trade secret is any formula, pattern, compound, device, process, tool, or mechanism not commonly known or discoverable by others, is maintained in secrecy by its owner and gives its owner a competitive advantage because it is kept secret.

Unlike patents and copyrights, a trade secret can theoretically last forever, as long as its owner tries to keep it secret and ensure that no one else can discover or copy it.

Software contains many features, such as code and the ideas and concepts behind it, which can be protected as trade secrets. Trade secret protection does not cover elements that can be acquired by lawful means, like independent development or reverse engineering. However, trade secrets are subject to theft and their protective status will be upheld if the owner can prove the secret fit the typical protection requirements and steps were taken to maintain its secrecy.

Coming up next – common forms of EULAs

In the next installment of this series, Mr. Donaldson will explore the two most common forms of EULAs and the four key elements which are essential for inclusion. Be sure to sign up on the right side of this page to be notified of future blog posts! We promise not to share your email address and you can unsubscribe at any time.

About the author

Jordan Donaldson is a business and intellectual property attorney.

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About the Author

Mike Wozniak is one of the co-founders of SoftwareKey.com and responsible for marketing, content and product strategy. When he isn't plotting new ways to help customers solve licensing and business automation challenges, he likes to travel and entertain guests who come to visit the Orlando area. He also writes most of the licensing tips here.